MoP asks states to stick to norms for reaping mega power project benefits

In a bid to ensure the compliance of the Mega Power Policy norms by the state-level power generating companies, the Ministry of Power (MoP) has called on the state governments of all the states and union territories to issue strict instructions to the state-sector firms to comply with the stipulations spelt out by the MoP in the said policy for enjoying the fiscal benefits offered under the policy. In a recent communiqué to the Principal Secretaries of the Energy Departments of the state governments, the MoP has asserted that many state firms, seeking mega power status for their upcoming projects, are found to have neither finalized the power sale deals on the basis of tariff-based bidding, nor procured necessary equipments through the mandatory international competitive bidding (ICB) route. Accordingly, the ministry has directed the state governments to ensure that the generation utilities comply with all the conditions of the policy, including the use of bidding route for the execution of long-term power purchase agreements (PPA) and award of the contracts for the procurement of equipments.

 Pertinently, the Mega Power Policy of the power ministry was introduced in 1995, in order to provide for rapid generation capacity ramp up in the country by utilizing the economies of scale available to large projects. The policy provides for fiscal sops to developers of 1,000 MW+ (700 MW in NER, Sikkim) thermal and 500 MW+ (350 MW in NER, Sikkim) hydel projects, in the form of duty exemptions. Guidelines under the policy were modified in 1998, 2002 and 2006, while another amendment, to rationalize the procedure for grant of the requisite mega certificate and facilitate quicker capacity addition, was made in 2009.